Source: U.S. Energy Information Administration.
Note: Data represent no particular region. "Actual" data include a 2% fluctuation around the average or "smooth" data at one minute intervals.

Electricity storage technologies that operate on short timescales (seconds, minutes, hours) can be used to keep a more precise balance between electric supply and demand. These power quality management technologies can fill the gaps between actual electric demand and an average, smooth demand curve that is easier for typical supply sources to follow (see chart above). However, a potential barrier to adopting these technologies is finding a way to get paid for the service they provide. Previous articles in Today in Energy discussed electricity storage and its longer-timescale applications. This article focuses on storage that performs best on short timescales, serving a different set of needs on the electric power system.

Electric power system operators must match electric supply to demand in real time, as demand changes over the course of the day. Fluctuations in demand must be matched by an increase or decrease in supply; if they are not, power quality will suffer (power quality issues include flickering lights and brownouts). The North American Electric Reliability Corporation (NERC) sets standards for power quality within tight tolerances.

Generators are scheduled to provide power based on forecasted demand. In most areas, generators are scheduled in hourly increments. Additional reserve supply is called on to fill in any gaps—to generate or stop generating—on a five- or ten-minute basis. This function is particularly important during "ramping" periods when demand is changing quickly, such as the morning hours charted above. On even shorter timescales—a few seconds to a few minutes—a similar filling-in-the-gaps process provides a service called "frequency regulation" or just "regulation".

Unpredictable changes on the supply side, such as variable (or intermittent) generation from solar or wind generators or unplanned outages, can further complicate the balancing function. As the amount of variable generation on a power system increases, so may the need for ramping and regulation services. A battery system at a wind farm, for example, can potentially be used to ensure the wind project delivers its forecast level of power until the grid can accommodate a change.

Fast-response capability is a distinct advantage of power quality management storage applications for ramping and regulation purposes. A battery, for instance, can operate nearly instantaneously—absorbing excess generation when demand declines or providing supplemental electricity when demand increases—as needed to smoothly match demand with the scheduled supply. Fast-response storage can also provide a variety of other grid-support functions—in addition to ramping and regulation—categorized as "ancillary services."

Fast-response technologies include established technologies, such as large capacitors, and emerging technologies like batteries and flywheels. In the United States, Beacon Power—recently acquired by Rockland Capital—has built two utility-scale (i.e., 1 MW or greater) flywheel facilities, with another in the planning stages. Battery systems come in many types, often scaled-up versions of familiar technologies like lithium ion batteries (like those in cell phones). They vary in power/energy densities, efficiency, scalability, cost, and how well they handle repeated cycling.

Other technologies are used to perform these power quality management functions. Fossil-fired combustion turbines are often used; however, the constant adjustment to match supply to demand is not an most efficient mode of operation for many turbines, and may increase emissions. Storage facilities produce no emissions; however they do consume some power, which may have associated emissions.

Some of the barriers to storage development are typical of any emerging technology in the utility sector and include a lack of data on performance, reliability, and cost to inform business decisions, as well as a lack of industry standards for planning, design, and operation. Monetizing the benefits of power quality management in market design is another barrier.

How monetary value is placed on these shorter-timescale, power quality management functions depends on how the local or regional electricity market is structured.

In regions with vertically-integrated utilities, the transmission operator or utility decides which technology best meets its needs and budget.

In a multilateral market like those run by regional transmission organizations (RTOs), storage technologies can bid into a regulation or ancillary services market (where those markets exist).

The Federal Energy Regulatory Commission (FERC) has a number of rulemakings addressing these issues. In 2007, Order 890 required RTOs to allow energy storage and demand response to bid into ancillary services markets. However, participation in a market for a single service (such as frequency regulation) may not provide storage operators with sufficient compensation for the full range of their benefits—e.g., supporting variable generation as well as performing the frequency regulation function. FERC also recently approved a new rule (Order 755) requiring markets to use a "pay for performance" approach to frequency regulation, designed to result in higher compensation for fast-response resources. Finally, Order 1000 provides guidelines for deciding who pays for transmission infrastructure when the benefits extend over state lines and across the seams between RTOs.